The Defense Ministry announced on Thursday that it has selected Italy’s Alenia Aermacchi M-346 Master as the next advanced combat trainer for the Israel Air Force.

The decision is expected to lead to a crisis with South Korea, which had pushed hard to win the $1 billion deal. Seoul has claimed that Israel favored Italy throughout the competition and that the tender was not conducted according to “international standards.”

On Thursday, Defense Ministry director-general Udi Shani convened a meeting of IAF and ministry officials to rule on the tender. According to the decision, the IAF will begin receiving 30 of the Italian fighter jets starting in 2014.

In return, Italy will commit to purchase just over $1b. of military platforms from Israeli defense companies, including satellites and airborne warning and control system (AWACS) aircraft.

The new trainer will replace the IAF Skyhawk – known in Israel as the Ayit – which first arrived in the country in 1967 after the Six Day War. It was the first fighter jet the US agreed to sell Israel.

It served prominently in the Yom Kippur War in 1973 and the First Lebanon War in 1982.

After that war, the IAF phased out the Ayit from operational service and began using it as an advanced trainer for pilot’s course cadets who complete their initial flight training on the Fougas aircraft. (The Fougas was also recently replaced by the Beechcraft T6 turboprop trainer).

Tension between Seoul and Jerusalem peaked this week in meetings Defense Minister Ehud Barak and Shani held with Korean officials on the sidelines of the Singapore Air Show. Before the decision was announced, Korea’s ambassador to Israel Ilsoo Kim said on Thursday: “Just like the expectations are high, the disappointment will also be great.”

Korea has expressed interest in purchasing new refueling tankers from Israel Aerospace Industries as well as the Iron Dome counter-rocket defense system from Rafael Advanced Defense Systems. Those deals are now believed to be in jeopardy.

A senior defense official expressed hope that Korea would not take drastic steps such as cutting off ties with Israel.

“We hope not to reach that stage,” the official said. “We understand them and it is only natural for them to be upset.”

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